How the SCOTUS Chevron Decision Impacts the Stem Cell Wild West

This week, something big happened with a SCOTUS decision that will eviscerate the FDA’s ability to control the stem cell wild west. This was the Chevron decision. So, what is this, and what does it mean? Let’s dive in.

What is Chevron Deference?

You may not know that the Supreme Court just decimated the power of all federal agencies. This is because of a case called Chevron v. NRDC. In the 1980s, this case gave a massive leg-up to every federal agency that created regulations that may have exceeded what Congress authorized. Let’s review some basic civics to understand why this is a big deal.

Congress creates the laws that are supposed to define the powers of the federal agencies. These agencies, in turn, develop regulations from those laws. This is like Congress creating a blank coloring book for the agencies, which are supposed to only color inside the lines defined by Congress. However, frequently, federal agencies color outside the lines by creating regulations that exceed what Congress authorized.

When a federal agency creates a regulation beyond what the law authorizes, eventually, that federal agency gets hauled into court to challenge the regulation. In a perfect world, the judge would look at what Congress authorized, see that the federal agency colored outside those lines, and find for the plaintiff, eliminating or weakening the regulation. However, because of the Chevron v. NRDC case, the courts developed a concept called Chevron Deference, which gave the federal agencies a considerable leg up. This case directed that the federal judge should give the agency deference in interpreting the scope of its regulations. This was like an NFL game where one team hired and controlled the refs. Hence, almost always, judges had their hands tied and would decide these regulation challenge cases in favor of the federal agency who would, of course, conclude that it had correctly interpreted the law and created a regulation within that mandate.

How All of This Applies to the FDA

Now, let’s apply Chrevon to the FDA and its regulations around autologous biologic drugs. Congress created the PHS Act, or Public Health Service Act. In the 1970s, this was amended to add authority for the FDA to reduce the risk of transmission of infectious diseases in tissue transplants. From that rather vague mandate, the FDA created regulations for biologic drugs. These rules are the 21 CFR 1271 regulations, which clearly state that they derive their congressional authority from the PHS Act:

“21 CFR 1271.10(a) sets out the criteria that form the foundation of FDA’s tiered, risk-based approach to regulating HCT/Ps. HCT/Ps that meet all of the criteria in 21 CFR 1271.10(a) are subject only to regulation under section 361 of the Public Health Service Act (PHS Act) and the regulations in 21 CFR part 1271. An HCT/P that falls into this category is sometimes referred to as a “361 HCT/P” and no premarket authorization is required.
If an HCT/P does not meet all the criteria set out in 21 CFR 1271.10(a), and the establishment that manufactures the HCT/P does not qualify for any of the exceptions listed in 21 CFR 1271.15, the HCT/P will be regulated as a drug,
device, and/or biological product under section 351 of the PHS Act and/or the Federal Food, Drug, and Cosmetic Act (FD&C Act), and applicable regulations, including 21 CFR part 1271, and premarket review will generally be required.”

The problem is that the PHS Act and its organ transplant regulations never contemplated cellular drugs. In addition, the Federal Food, Drug, and Cosmetic Act (FD&C Act) never contemplated turning human tissue into cellular drugs. For example, nowhere in the PHS Act does it state what should be a transplanted tissue (361) and what should be a prescription biologic drug (351). Those are all regulations made later by the FDA.

Hence, if any reasonable person reads the parts of the PHS Act that authorize the agency to reduce the spread of infectious diseases in organ transplants and then looks at the resulting 1271 regulations, it’s quite clear that the FDA colored outside the lines. However, in all challenges to the 351 biologic drug regulations contained in 21 CFR 1271, the courts (except for the Bernal SVF decision) gave the FDA Chevron Deference. This means that looking at the actual coloring book to see if there was coloring outside the lines was not permitted. It was as if Chevron kept the evidence of the coloring book locked in a safe during the trial.

This week’s SCOTUS decision gets rid of Chevron Deference. So, federal judges are now free to examine if the FDA has colored outside the lines of what Congress authorized. In the cases of the rules it created for biologic drugs in 1271, it’s clear that the FDA has colored outside the lines of the PHS Act.

My Concerns

Way back when we challenged the FDA on whether autologous culture-expanded cells were drugs, we lost largely due to Chevron Deference. At the time, I imagined a rational autologous culture-expanded MSC space that, if we won, would have rational physician actors who would only offer these treatments for a handful of ailments where there was evidence they could work. This would all be strictly controlled and sane with massive registries, data analysis, and clinical publications. Did that happen? Nope. Despite the FDA winning multiple challenges and coming down hard on multiple bad actors, most of the space has careenered further out of control. More patients these days are misled about the benefits of cellular therapy than benefit from it. The space has become insane. Hence, I have become an advocate for tighter FDA control.

What’s Next?

What’s going to happen now that Chevron is gone? I suspect the FDA will continue its current course and try to eliminate key players who are out of control, so none of that changes. The biggest changes will come in cases where companies challenge the FDA in federal court. Without Chevron, the FDA win rate will change from 90% to less than 50/50. That will be enough to upend the FDA’s authority in this space.

So, for the next 12-24 months, we may not see the direct effects of the loss of Chevron. However, as time passes, we will see a significant erosion of the FDA’s ability to police this space. That will have some lasting implications:

1. The non-FDA-regulated autologous space will careen further out of our control, and the stem cell wild west will become much wilder.
2. The FDA will need to return to Congress to get the autologous 1271 regulations cemented into actual law or be very careful about which cases it brings to court in which jurisdictions. Why? A federal judge could shred the 1271 regulations on autologous cell drugs. The agency would be especially vulnerable in conservative jurisdictions when physicians, for example, are culture-expanding on-site for their patients, as this activity will be tough to distinguish from the practice of medicine without Chevron.
3. The space for regulated cell drug trials will be impacted. This means this space will increasingly compete with an unregulated autologous cell drug space. If regulated and FDA-approved cell drugs make the blind see and the crippled walk, they can still be quite successful, despite their greater development costs. Expensive cellular drugs that can’t out-compete the success of cheaper unregulated offerings will be much less commercially successful.
4. The loss of Chevron is very unlikely to impact allogeneic cell drugs as the FDA has broader authority there and these products look much more like drugs in their scale and distribution.
5. These changes may take five years or more to take full effect, as federal judges will be slow to change. What will change things is that when stakeholders lose these district court cases, they will be more likely to be appeal and then more likely to sent back to that district court asking that the judge consider the loss of Chevron.

The upshot? I have mixed emotions about the loss of Chevron Deference. On the one hand, it defined one part of my early career, and at the time, it would have been great to have a level playing field in court. On the other hand, the stem cell Wild West is out of control, and weakening the FDA’s ability to control it will likely harm more patients than it helps.

Chris Centeno, MD is a specialist in regenerative medicine and the new field of Interventional Orthopedics. Centeno pioneered orthopedic stem cell procedures in 2005 and is responsible for a large amount of the published research on stem cell use for orthopedic applications. View Profile